BMW Group CEO Oliver Zipse expresses his frustration with the Inflation Reduction Act supporting the US automakers. Further adds that the market demand will decide the automaker’s investment in the US. The Inflation Reduction Act (IRA) ties the US EV tax credits to North American productions and sourcing of key parts and raw materials.
The outspoken executive vowed that BMW Group will not be forced off-course by political agendas and will do what makes business sense for the company. The German automaker is under pressure to rethink its production footprint and supply lines when it comes to EV parts and batteries to qualify for the new $7,500 tax credit in the US. Zipse said at a media briefing at CES 2023 according to Automotive News, “We would not change in a substantial manner our strategy because of current politics. Our cars have a life cycle of maybe seven years, sometimes even longer. That’s roughly two or three administrations.”
BMW’s head honcho highlighted the dangers of reacting to political winds using an example from the Trump era when the automaker was under similar pressure to expand its manufacturing footprint in the US. “We discussed with the previous administration … and they would try to force us into the implementation of a combustion engine plant in the United States, which we don’t have today,” Zipse said. If BMW had gone along, it would have been a bad decision, given the auto industry’s pivot away from fossil fuels, the executive noted.
Manufacturing
Zipse expressed his frustration with the Inflation Reduction Act, which he believes favors US automakers with big domestic production and supplier networks. He called for a “level playing field as long as you are serving an American customer,” offering the example of Europe, where any manufacturer gets an incentive or tax break if it sells an EV there. The executive argued that in some ways, BMW is already as American as apple pie since its largest factory in the world, which employs 11,000 people, is in Spartanburg, South Carolina. The plant produced more than 416,000 SUVs last year, about 40 percent of which were exported worldwide.
BMW is investing $1.7 billion into building a new generation of EVs in South Carolina. Based on its Neue Klasse platform, the electric SUVs will enter production in Spartanburg by mid-decade along with battery pack assembly. With such a big investment, Zipse said it would be a disappointment if BMW was not part of the IRA umbrella.